11. ALPS TRANSPORTATION and/or ALFREDO E. PEREZ, petitioners, vs. ELPIDIO M.

On 11 August 2005, Rodriguez filed before the labor arbiter a complaint for illegal dismissal,
RODRIGUEZ, respondent. nonpayment of 13th month pay, and damages against ALPS Transportation and Alfredo Perez, the
Labor Law; Termination of Employment; For a dismissal to be valid, the rule is that the employer proprietor of petitioner bus company.13
must comply with both substantive and procedural due process requirements.―For a dismissal to be In response to the complaint, petitioners stated that they did not have any prerogative to dismiss
valid, the rule is that the employer must comply with both substantive and procedural due process Rodriguez, as he was not their employee, but that of Contact Tours.14 In fact, based on their agreement
requirements. Substantive due process requires that the dismissal must be pursuant to either a just or an with Contact Tours, it was supposedly the latter that had the obligation to inform respondent of the
authorized cause under Articles 282, 283 or 284 of the Labor Code. Procedural due process, on the other contents of the reports and to decide on the appropriate sanctions. 15 Petitioners further explained that due
hand, mandates that the employer must observe the twin requirements of notice and hearing before a to the issuance of the three irregularity reports against Rodriguez, they wrote to Contact Tours and
dismissal can be effected. recommended the termination of respondent’s assignment to them.16
Same; Same; The Labor Code provides that the burden of proving that the termination of an During the pendency of the illegal dismissal case before the labor arbiter, ALPS Transportation
employee was for a just or authorized cause lies with the employer.―The Labor Code provides that the charged Rodriguez with theft before the Office of the Provincial Prosecutor of Tanauan,
burden of proving that the termination of an employee was for a just or authorized cause lies with the Batangas.17 However, petitioners eventually filed an Affidavit of Desistance and withdrew the criminal
employer. If the employer fails to meet this burden, the conclusion would be that the dismissal was charges against respondent.18
unjustified and, therefore, illegal. On 12 January 2006, the labor arbiter dismissed the illegal dismissal complaint for lack of merit.19 He
Same; Same; Reinstatement; Backwages; An illegally dismissed employee is entitled to the twin explained that no evidence had been adduced to support the contention of Rodriguez that the latter had
remedies of reinstatement and payment of full backwages.―An illegally dismissed employee is entitled to been terminated on 27 January 2005.20 Moreover, during the mandatory conference, the representative of
the twin remedies of reinstatement and payment of full backwages. In Santos v. National Labor Relations Contact Tours manifested that the company had not dismissed Rodriguez, and that it was in fact willing to
Commission, 154 SCRA 166 (1987), we explained: The normal consequences of a finding that an reinstate him to his former position.21 Thus, the labor arbiter concluded that Rodriguez had not been
employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to illegally dismissed, and was actually an employee of Contact Tours, and not of ALPS Transportation. 22
his former position without loss of seniority rights and, secondly, the payment of backwages Rodriguez appealed the dismissal to the National Labor Relations Commission (NLRC). On 28
corresponding to the period from his illegal dismissal up to actual reinstatement. The statutory intent on February 2007, the NLRC set aside the decision of the labor arbiter and entered a new one, the dispositive
this matter is clearly discernible. Reinstatement restores the employee who was unjustly dismissed to the portion of which reads:
position from which he was removed, that is, to his status quo ante dismissal, while the grant of WHEREFORE, the assailed Decision dated January 12, 2006 is hereby SET ASIDE and a
backwages allows the same employee to recover from the employer that which he had lost by way of new one is being entered, directing the respondents to reinstate the complainant to his former
wages as a result of his dismissal. These twin remedies — reinstatement and payment of backwages — position without loss of seniority rights and privileges but without backwages.
make the dismissed employee whole who can then look forward to continued employment. Thus, do these SO ORDERED.23
two remedies give meaning and substance to the constitutional right of labor to security of tenure. In so concluding, the NLRC ruled that Contact Tours was a labor-only contractor.24 Thus, Rodriguez
Same; Labor-Only Contractors; The presumption is that a contractor is a labor-only contractor should be considered as a regular employee of ALPS Transportation. 25
unless he overcomes the burden of proving that it has substantial capital, investment, tools, and the As regards the claim of illegal dismissal, the NLRC found that Rodriguez failed to prove that his
like.―“The presumption is that a contractor is a labor-only contractor unless he overcomes the burden of services were illegally terminated by petitioners, and that he was prevented from returning to
proving that it has substantial capital, investment, tools, and the like.” While ALPS Transportation is not work.26 However, the bus company likewise failed to prove that he had abandoned his work. 27 Thus, citing
the contractor itself, since it is invoking Contact Tours’ status as a legitimate job contractor in order to previous rulings of this Court, the NLRC held that in case the parties fail to prove either abandonment or
avoid liability, it bears the burden of proving that Contact Tours is an independent contractor. termination, the employer should order the employee to report back for work, accept the latter, and
Corporation Law; Sole Proprietorship; Juridical Personality; A sole proprietorship does not reinstate the employee to the latter’s former position. However, an award for backwages is not warranted,
possess a juridical personality separate and distinct from that of the owner of the enterprise.―The CA as the parties must bear the burden of their own loss.28
correctly ruled that since ALPS Transportation is a sole proprietorship owned by petitioner Alfredo Perez, Dissatisfied with the ruling of the NLRC, Rodriguez filed a Rule 65 Petition for Certiorari with the
it is he who must be held liable for the payment of backwages to Rodriguez. A sole proprietorship does CA.
not possess a juridical personality separate and distinct from that of the owner of the enterprise. Thus, the After a review of the records, the CA concluded that the NLRC acted with grave abuse of discretion
owner has unlimited personal liability for all the debts and obligations of the business, and it is against in rendering the assailed decision. The appellate court ruled that, in termination cases, it is the employer
him that a decision for illegal dismissal is to be enforced. who bears the burden of proving that the employee was not illegally dismissed.29Here, the CA found that
PETITION for review on certiorari of the decision and resolution of the Court of Appeals. ALPS Transportation failed to present convincing evidence that Rodriguez had indeed collected bus fares
The facts are stated in the opinion of the Court. without issuing corresponding tickets to passengers. The appellate court held that the irregularity reports
Aris J. Talens for petitioners. were mere allegations, the truth of which had not been established by evidence. 30
Florencio Lameyra for respondent. Moreover, the CA gave no credence to ALPS Transportation’s argument that Rodriguez had not yet
SERENO, CJ.: been terminated when he filed the illegal dismissal complaint, as he had not yet received any notice of
Before this Court is a Rule 45 Petition for Review1assailing the Decision2 and Resolution3 of the termination.31 The appellate court explained that, before the illegal dismissal complaint was filed, more
Court of Appeals (CA) in CA-G.R. SP No. 100163. than six months had lapsed since respondent was last given a bus assignment by ALPS
The Facts Transportation.32 Thus, the CA concluded that the argument of the bus company was only an excuse to
Respondent Elpidio Rodriguez (Rodriguez) was previously employed as a bus conductor.4 He entered cover up the latter’s mistake in terminating him without due process of law. 33
into an employment contract with Contact Tours Manpower5(Contact Tours) and was assigned to work The CA then ordered ALPS Transportation to reinstate Rodriguez and to pay him full
with petitioner bus company, ALPS Transportation.6 backwages, viz.:
During the course of his employment, Rodriguez was found to have committed irregularities on 26 WHEREFORE, the petition is GRANTED. Alfredo Perez is declared guilty of having
April 2003,712 October 2003,8 and 26 January 2005.9 The latest irregularity report dated 26 January 2005 committed illegal dismissal. Accordingly, only the portions of the assailed dispositions ordering
stated that he had collected bus fares without issuing corresponding tickets to passengers. The report was the reinstatement of Elpidio Rodriguez to his former position without loss of seniority rights
annotated with the word “Terminate.”10 is AFFIRMED and the phrase, “but without backwages” is ANNULLED and SET ASIDE. In
Rodriguez alleged that he was dismissed from his employment on 27 January 2005, or the day after lieu thereof, Alfredo Perez is ORDERED to pay Elpidio Rodriguez backwages computed from
the issuance of the last irregularity report. However, he did not receive any written notice of the time he was illegally dismissed until his actual reinstatement. No costs.
termination.11 He went back to the bus company a number of times, but it refused to readmit him.12 SO ORDERED.34
 Aggrieved by the appellate court’s decision, petitioners filed the instant Rule 45 Petition before this circumstances, management has concluded that his dismissal is warranted. Clearly, therefore, the
Court. inescapable conclusion is that procedural due process is wanting in the case at bar.
The Issues Having found that Rodriguez was illegally dismissed, we now rule on petitioners’ liabilities and
As culled from the records and the submissions of the parties, the issues in this case are as follows: respondent’s entitlements under the law.
1. Whether respondent Rodriguez was validly dismissed; and An illegally dismissed employee is entitled to the twin remedies of reinstatement and payment of full
2. Assuming that respondent was illegally dismissed, whether ALPS Transportation and/or Alfredo backwages. In Santos v. National Labor Relations Commission,51 we explained:
E. Perez is liable for the dismissal. The normal consequences of a finding that an employee has been illegally dismissed are, firstly,
The Court’s Ruling that the employee becomes entitled to reinstatement to his former position without loss of
We uphold the assailed Decision and Resolution and rule that respondent Rodriguez has been seniority rights and, secondly, the payment of backwages corresponding to the period from his
illegally dismissed. illegal dismissal up to actual reinstatement. The statutory intent on this matter is clearly
For a dismissal to be valid, the rule is that the employer must comply with both substantive and discernible. Reinstatement restores the employee who was unjustly dismissed to the position
procedural due process requirements.35 Substantive due process requires that the dismissal must be from which he was removed, that is, to his status quo ante dismissal, while the grant of
pursuant to either a just or an authorized cause under Articles 282, 283 or 284 of the Labor backwages allows the same employee to recover from the employer that which he had lost by
Code.36 Procedural due process, on the other hand, mandates that the employer must observe the twin way of wages as a result of his dismissal. These twin remedies — reinstatement and payment of
requirements of notice and hearing before a dismissal can be effected. 37 backwages — make the dismissed employee whole who can then look forward to continued
Thus, to determine the validity of Rodriguez’s dismissal, we first discuss whether his employment employment. Thus, do these two remedies give meaning and substance to the constitutional right
was terminated for a just cause. of labor to security of tenure. (Citations omitted)
Petitioners argue that the dismissal of Rodriguez was brought about by his act of collecting fare from Thus, the CA committed no reversible error in upholding the NLRC’s order to reinstate Rodriguez
a passenger without issuing the corresponding ticket.38 This was not the first irregularity report issued and in directing the payment of his full backwages, from the time he was illegally dismissed until his
against respondent, as similar reports had been issued against him on 26 April 2003 39 and 12 October actual reinstatement.
2003.40 Thus, the company had lost trust and confidence in him, as he had committed serious misconduct As to who should bear the burden of satisfying respondent’s lawful claims, petitioners submit that
by stealing company revenue.41 Petitioners therefore submit that the dismissal was valid under Article 282 since Rodriguez was an employee of Contact Tours, the latter is liable for the settlement of his claims.
of the Labor Code.42 We do not agree.
For his part, Rodriguez denies the contents of the irregularity report. 43 He states that the report “The presumption is that a contractor is a labor-only contractor unless he overcomes the burden of
consists of a mere charge, but is bereft of the necessary proof. 44Moreover, he submits that while the bus proving that it has substantial capital, investment, tools, and the like.”52While ALPS Transportation is not
company filed a criminal complaint against him for the same act, the complaint was dismissed pursuant to the contractor itself, since it is invoking Contact Tours’ status as a legitimate job contractor in order to
an Affidavit of Desistance, in which the bus company stated that “the incident arose out of [a] avoid liability, it bears the burden of proving that Contact Tours is an independent contractor. 53
misunderstanding between them.”45 Finally, he contends that the company’s invocation of the 2003 It is thus incumbent upon ALPS Transportation to present sufficient proof that Contact Tours has
irregularity reports to support his dismissal effected in 2005 was a mere afterthought.46 In any event, he substantial capital, investment and tools in order to successfully impute liability to the latter. However,
maintains that even those alleged infractions were not duly supported by evidence. 47 aside from making bare assertions and offering the Kasunduan between Rodriguez and Contact Tours in
We find for respondent and rule that the employer failed to prove that the dismissal was due to a just evidence,54 ALPS Transportation has failed to present any proof to substantiate the former’s status as a
cause. legitimate job contractor. Hence, the legal presumption that Contact Tours is a labor-only contractor has
The Labor Code provides that the burden of proving that the termination of an employee was for a not been overcome.
just or authorized cause lies with the employer.48 If the employer fails to meet this burden, the conclusion As a labor-only contractor, therefore, Contact Tours is deemed to be an agent of ALPS
would be that the dismissal was unjustified and, therefore, illegal. 49 Transportation.55 Thus, the latter is responsible to Contact Tours’ employees in the same manner and to
Here, we agree with Rodriguez’s position that the 26 January 2005 irregularity report, which served the same extent as if they were directly employed by the bus company.56
as the basis of his dismissal, may only be considered as an uncorroborated allegation if unsupported by Finally, the CA correctly ruled that since ALPS Transportation is a sole proprietorship owned by
substantial evidence. On this matter, we quote with favor the ruling of the appellate court: petitioner Alfredo Perez, it is he who must be held liable for the payment of backwages to Rodriguez. 57 A
[T]he nature of work of a bus conductor involves inherent or normal occupational risks of sole proprietorship does not possess a juridical personality separate and distinct from that of the owner of
incurring money shortages and uncollected fares. A conductor’s job is to collect exact fares from the enterprise.58 Thus, the owner has unlimited personal liability for all the debts and obligations of the
the passengers and remit his collections to the company. Evidence must, therefore, be substantial business, and it is against him that a decision for illegal dismissal is to be enforced.59
and not based on mere surmises or conjectures for to allow an employer to terminate the WHEREFORE, the instant Rule 45 Petition for Review is DENIED. The assailed Decision and
employment of a worker based on mere allegations places the latter in an uncertain situation and Resolution of the Court of Appeals in CA-G.R. SP No. 100163 are hereby AFFIRMED.
at the sole mercy of the employer. An accusation that is not substantiated will not ripen into a SO ORDERED.
holding that there is just cause for dismissal. Leonardo-De Castro, Bersamin, Villarama, Jr. andReyes, JJ., concur.
A mere accusation of wrongdoing or a mere pronouncement of lack of confidence is not Petition denied, judgment and resolution affirmed.
sufficient cause for a valid dismissal of an employee. Thus, the failure of the [petitioners] to Notes.―In labor-only contracting, the following elements are present: (a) The person supplying
convincingly show that the [respondent] misappropriated the bus fares renders the dismissal to workers to an employer does not have substantial capital or investment in the form of tools, equipment,
be without a valid cause. To add, jurisprudence dictates that [if] doubt exists between the machineries, work premises, among others; and (b) The workers recruited and placed by such person are
evidence presented by the employer and the employee, the scales of justice must be tilted in performing activities which are directly related to the principal business of the employer. (Sy vs. Fairland
favor of the latter.50 (Citations omitted) Knitcraft Co., Inc., 662 SCRA 67 [2011])
Thus, we rule that petitioners have failed to prove that the termination of Rodriguez’s employment Under the doctrine of strained relations, payment of separation pay is considered an acceptable
was due to a just cause. alternative of reinstatement when the latter option is no longer desirable or viable. (Bañares vs. Tabaco
Turning to the issue of procedural due process, both parties are in agreement that Rodriguez was not Women’s Transport Service Cooperative [TAWTRASCO], 694 SCRA 312 [2013])
given a written notice specifying the grounds for his termination and giving him a reasonable opportunity
to explain his side; a hearing which would have given him the opportunity to respond to the charge and
present evidence in his favor; and a written notice of termination indicating that after considering all the